What’s going on with the College Hill development?

After learning in the span of a few days that Burger Stand is moving and that pipes are busting in formerly-occupied buildings, it’s hard not to wonder what exactly is happening with the College Hill development.

We’re currently about 15 years into the 20-year Tax-Increment Financing (TIF) cycle of the development project, so you’d think we should seeing returns for our community. But is it possible that the College Hill Development has caused more blight in the area? Is it possible that there is now more vacancy in College Hill and Central Park? History might remind us that White Lakes Mall was shiny and new once, too.

The College Hill development stands at an important crossroads of bikeways in Topeka, extending both north and south of the intersection of 15th Street and the Washburn/Lane parkway.

Built in 2006 after the City of Topeka allowed developers to use eminent domain to buy and bulldoze about 5 city blocks, the project may have been doomed from the start.

Don’t do it.

Cities are always looking for the easy button. Hiring one developer to take care of 5 city blocks instead of 36 different sets of homeowners, renters, landlords, and business owners sounds like a great deal. Less paperwork, less headache for the city. And we get rid of some of that messy complexity which makes cities unique. (Hey, wait a second…)

Most of the owners in the area took the buy-out from the developers and left. Renters, of course, had no choice in the matter. One holdout stood his ground, for better or for worse – Jerry’s Bike Shop. It’s now the last remaining, occupied, original brick building in the entire district.

Parts of the new project were built to be mixed-use development; storefronts on the ground floor with apartments on the upper floors. This is typical in downtown areas and in dense neighborhoods. In theory, it’s a great fit for the development, since it was meant to replace businesses as well as residences.

Use this slider tool to compare before and after the development. In the “before” photo, green are commercial and blue are residential properties. Boundaries are approximate. In the “after” photo, the district properties are bounded in orange. The red box inside the upper orange box is Jerry’s Bike Shop.

Fuzzy math

But the College Hill development bulldozed dozens of homes and then set rental rates that were more than double what anyone had been spending in the area. They built brand-new townhomes, and tried to sell them for $140,000 to $170,000 across the street from houses that had never sold for more than $60,000. The development built brand new commercial space in a district that months before had been described as “blighted,” “dangerous,” and “depressed,” and then set astronomical rental rates to price out almost all local business contenders. Is it any wonder that the development stayed vacant for years? Furthermore, did the City Council know that these new townhomes would be listed for a price that is more than five times the median household income in this neighborhood?

We love to promote the American dream here in Kansas. But it’s not one person’s dream to own a bunch of apartment buildings across several states, while being responsible for the hundreds of residents they represent. That person’s dream is about getting rich, whatever the consequences. That should be obvious, since the development has been sold at least twice since 2006. It’s one person’s dream to open up a restaurant, or a bike shop, or a T-shirt store, be their own boss, and see where it goes. Large-scale real estate development is rarely a dream; it’s almost always financial speculation.

Incremental intensification adds complexity to a neighborhood slowly. Real estate speculation tries to skip all of the middle steps. via Strong Towns

The homes and businesses that occupied the area before Redevelopment were built and re-built over the course of generations. It can take a long time for a district to become successful enough to support many families and businesses. That incremental growth can give a district incredible sticking power. Complementary businesses start to have more success together than they ever would have had alone. Friends move in together and become roommates. Families grow and build on additions. Neighbors start to develop habits of visiting the local haunts. Local business owners support the community, and the community supports the businesses.

Now, in 2021, the area has even less appeal than it did before the Redevelopment happened. There are more apartment options, sure. But there is no longer a grocery store. The award-winning coffee shop has moved on to a new TIF-funded development elsewhere in Topeka. The beloved burger joint has moved to a new neighborhood. In short, rising rents have scared off local businesses and left dozens of apartments empty.

The importance of growing local business before recruiting new business

Local businesses were anchors in College Hill. The dozen or so local businesses that existed before the Redevelopment project, in addition to the 20 or so homes in the area, all contributed to the success of the Dillon’s grocery store just a couple blocks north. The network of diverse small businesses contributed to the greater community. Most of the businesses remaining in the area, like Tortilla Jack’s and Oscar’s Bar, are not part of the development district, but continue to contribute to the neighborhood’s success. Jerry’s Bike Shop is the exception; it was in the district before, and it’s still going strong. Perhaps this is a lesson for us: Don’t mess with a good thing. Studies support this idea, too: Local businesses bring greater value to communities through both shopping and ownership.

Before the Redevelopment project started, Dillon’s Grocery at Huntoon and Lane was a hub of activity for the neighborhood. The store was always busy; the BP gas station across the street was always busy; the liquor store just east was always busy. But as the developers started buying and bulldozing homes and businesses in the area, as residents started leaving the area or leaving town, and as the effects of the 2008 recession exacted their toll on Topeka, crime spiked to the highest levels the city had seen in a decade.

Just a few years after the Redevelopment construction was complete, Dillon Food Stores gave the City two weeks notice that it would be closing its grocery store at Huntoon and Lane.

Is that the deal the Devil offered? “I’ll clear blight and build you a golden apartment complex, but I’m taking your grocery store.”

The neighborhood and city are happy to have GraceMed health clinic in place of the grocery store now, but the area is still a food desert. You’re lucky if you can find a couple of fresh oranges at the Kwik Shop at 17th and Lane; otherwise, you’re out of fresh food options for more than a mile in any direction.

That’s the problem with the easy button. It’s like a genie granting a wish. Things are never as they seem.

Before the Redevelopment, the area may not have looked very successful, but in terms of tax dollars, it was probably performing better. Granular development is typically more successful for cities’ infrastructure investments than big, homogenous blocks. Small developments use land more efficiently, and end up being worth more per acre. In turn, the city can charge higher rates of tax for those small acreage, high-value properties. See the following example from another midwest city.

The “old and blighted” block is worth 41% more than the “Shiny and new” block in Brainerd, MI. via Strong Towns

The most successful district in Shawnee County is downtown. The limited square footage in downtown is many times more successful than any other area in the entirety of Shawnee county, including the Wanamaker commercial strip. We cannot look to the Wanamaker district and think “success.” We must look at downtown, and realize that small, local, independent businesses represent our present success and will be our future success, too. Just one example: Capitol Federal Bank was started in Topeka in the 1890s as a small business. Now it’s a regionally respected financial institution with one of the most valuable addresses in 600 square miles.

This is a 3-D chart of property tax value per acre of different parcels in Topeka. One of those really tall red peaks is Capitol Federal, with a property tax value of more than $640,000 per acre.

One more note on the result of the College Hill Redevelopment project. When you tell a bunch of long-time residents to leave their homes and businesses, you change the character of the neighborhood. Displacing existing residents for “more desirable,” different residents is the textbook definition of gentrification. Fortunately, this doesn’t happen often in Topeka (though it absolutely has happened here before) but when it does happen, it’s almost never good.

Click to enlarge. This screenshot from JusticeMap.org shows that the College Hill Redevelopment area (labeled in lime green) now has a greater proportion of white residents than the blocks to the north, east, south, and west of the district.

“Gentrification” is the easy button. Cities have been told that it’s a great idea to promote developments and partnerships like this. And they don’t sound bad on face value. But gentrification is a bad move for cities because it increases vacancy, increases the infrastructure burden on the city, costs the city money both short-term and long-term, decreases diversity, and scatters families and businesses elsewhere. Those residents and businesses, by the way, contributed to community connectedness, and had a better record of paying their taxes than real estate developers.

City Policy Changes 

To credit the City of Topeka, there have been some lessons learned on the College Hill Redevelopment project. Because the City was first on the hook for the debt for the Tax-Increment Financing (TIF) project in College Hill, that meant that the City was responsible before the developers. The TIF deal with College Hill lasts 20 years, and the plan was that the district would be so successful that it would support its normal tax liability as well as some surplus, which would then fund the TIF deal. But the College Hill development has had many years of being not so successful. In those years, the City of Topeka has actually had to pay from the general fund to cover its annual commitment of the $5 million TIF deal. What was supposed to cost the city nothing has ended up being pretty expensive. That has been a hard lesson. Now, the rules have been updated. If a TIF development project isn’t performing well enough to pay the normal tax and the surplus debt service, developers do not receive the surplus funds at all. In addition, City policy has changed to say that no project would be eligible for incentive if any of the developers owe back property taxes or otherwise owe the city any money. This is a great mechanism for preventing a deadbeat developer like Kent Lindemuth from getting city incentive money, but it doesn’t stop him or anyone else from showing up with cash (or questionable financing) and just buying up properties.

Other policy changes have been a little quieter. The City of Topeka has a very successful program called the Neighborhood Revitalization Plan, which gives residential and commercial developers rebates for improving properties in “intensive care” and “at-risk” neighborhoods. If this had been the approach for the Redevelopment area, we might still have more of those original neighborhood businesses, and we would definitely still have more of the original neighbors. Consider this nugget of wisdom from Atlanta: “Small improvements, one home at a time, can slowly make neighborhoods more attractive and safe.”

What’s next for the College Hill development?

Perhaps our concerns with the College Hill development are baseless, and we’re being curmudgeons about neighborhood change. Businesses move all the time; new local businesses could just as easily move into the College Hill development. The NOTO Arts District has seen a fair amount of churn in ten years, but new businesses keep popping up. Who’s to say this won’t be the case in College Hill? One sign we’re not merely succumbing to curmudgeonry is the repeated flight of key College Hill businesses followed by long waits for their replacements. A brief look at rents in College Hill and NOTO is enough to tell us why these two stories are different; rents are affordable in NOTO and that lowers the biggest barrier of entrepreneurship.

It’s a great win for the Brookwood Shopping Center that Burger Stand has chosen to relocate there, next to many complementary local businesses, including retail grocery and liquor. And back in College Hill, residential occupancy is still strong, and the change of one apartment building to a weekly hotel may even increase the sales tax generated by the district. Again, we’re doubtful that the transition will improve the curb appeal of the College Hill Development, but anything’s possible.

If the goal is to reduce blight, the current owners of the College Hill Development are failing. Residential and commercial occupancy has decreased in the district since 2017, and vacancy has noticeably increased – that’s the opposite of what Topeka needs. 

Cities are complex systems, and it’s hard to demonstrate what makes them work. But technical solutions to adaptive challenges won’t make things better. A hundred small projects will have greater effect in a city than one large project that costs 100 times as much. We have many programs and plans in Topeka which are perfect frameworks for a better way forward, like the Neighborhood Revitalization Plan, and the recent public discussion about a Land Bank. Consider this line from the City’s Land Use and Growth Management Plan 2040: “Fiscally responsible growth happens where Topeka has already invested. Grow value in Topeka’s existing neighborhoods with strategic investments and incentives.”

Recommendations

As the City of Topeka and the Greater Topeka Partnership look to make progress on the challenges facing our city, we have three core suggestions. These all require hard work to implement, working directly with people, spending time face-to-face (even if it’s on Zoom), and understanding the challenges of our neighbors. These aren’t big, dramatic construction projects. These are small, one-off, micro-developments. These require relationship-building and vulnerability.   

  1. First, work smaller. No, even smaller than that. One house or one business at a time. New businesses account for nearly all new job creation in the entire country. We shouldn’t waste our time with old, national corporations asking for tax handouts and free land. Start with small, local businesses and small projects with big potential. Invest there through scalable programs that rely on the entrepreneurs’ hard work and ingenuity, rather than over-reliance on public tax dollar and land giveaways to large corporate developers. Repeat.
  2. Next, focus on neighborhoods. Some of our neighborhoods in Topeka are falling apart. Our oldest areas with the most charming housing stock have vacant lots, crumbling sidewalks, and plummeting values. We need to turn much more of our attention to the people holding our old neighborhoods together — before considering new development with big garages and swoopy sidewalks. We must work with existing residents and show that opportunity exists for them — opportunities for federal grants, low-interest loans, tax rebates, even a path toward building wealth. This is difficult work, and it requires establishing trust between residents and the city. This will be especially hard in formerly-redlined neighborhoods, where residents have been understandably leery to trust the city for generations. 
  3. Finally, cool it on the TIF districts. A flashy $100 million development plan is a high-roller asking the city to share the responsibility for a private gamble. A gamble, that’s all. We don’t have to take those bets. We have a thousand better bets in our existing neighborhoods with our existing residents.


College Hill Redevelopment Project timeline:

2004-2005Property developers Southwind Capital LLC begin buying up the 36 properties —about 20 single-family homes and 16 commercial buildings — required to complete their vision for the College Hill Redevelopment project. The project is designed by Treanor Architects and proposes to meet the needs of Washburn University students looking for high-quality housing near the college.
2006Most homeowners, renters, and businesses have left after selling their properties to the developers. A few holdouts remain, including College Hill Liquor and Jerry’s Bike Shop. Jerry’s Bike Shop refuses to sell; College Hill Liquor wants compensation for being forced to move while running a successful business.
July 2006Topeka City Council votes to condemn the lease for Mike Calvin’s liquor store so that the project developers can make arrangements with the property owner – and will not be required to compensate Mike Calvin for consideration of his business. The Eminent Domain issue is sent to the courts.
2006Topeka City Council votes to provide $5 million in Tax-Increment Financing to support the project, which built 183 apartments, 25 townhomes and 24,000 sf of retail space. Apartments begin opening for rent.
January 2009Submarina California Subs opens
2009Developer Lew McGinnis accused of running Ponzi Scheme fraud with apartment buildings sales in Utah
July 2009Court rules that Jerry’s Bike Shop does not have to pay the developers for alleged delays in construction
December 2009Submarina California Subs closes
September 2010College Hill development fails to sell any of its 25 townhomes and seeks to sell them to Wichita company who will market them as lower-income housing.
October 2010Three apartment complexes owned by Lew McGinnis in Wichita face foreclosure and reclamation by banks
December 2010CoreFirst bank sues the original developers of the College Hill Redevelopment for repayment of more than $20 million in project financing. At this point, the project has failed to produce tax revenues large enough to cover the debt service on the city’s TIF deal, and the city has been forced to pay the difference.
2011PT’s at College Hill opens
September 2011The Burger Stand at College Hill opens
November 2012Boca Cafe opens in former Submarina space
December 2012Topeka Police Officers David Gogian and Jeff Atherly shot and killed in the parking lot of Dillon’s at Huntoon and Lane
April 2014Boca Cafe closes
February 2016Huntoon Dillon’s closes, announcing the store has not made a profit since 2004
Spring 2016Monsoon Express opens in former Boca Cafe space
June 2017Wheatfield Village development project announced by local/regional developer Jim Klausman, approved by Topeka City Council for TIF District
August 2017Lew McGinnis buys the College Hill development
June 2018Topeka Planning Commission recommends the College Hill development be approved for a dog park
July 2018PT’s at College Hill named Top Coffee Shop in Kansas by thedailymeal.com
May 2019PT’s at Wheatfield Village opens, along with other businesses in the new TIF development: B&B Theaters, Johnny’s Tavern, and Spin Pizza
September 2019Apartment complexes in Emporia owned by Lew McGinnis face complaints of lack of maintenance
December 2019College Hill Pizza Pub closes
March 2020COVID-19 Pandemic hits the U.S.
May 2020:PT’s at College Hill closes permanently
Summer 2020“Washburn Hotel Suites” awning is added to the building that formerly housed PT’s and many apartments. The building appears to be emptied out of apartment renters.
February 2021The Burger Stand Topeka debuts a new name and announces the move to Brookwood Shopping Center
February 2021The City of Topeka reports that the College Hill Development is still underperforming on tax revenues, and the city is still responsible for paying the debt service on the TIF arrangement

Corrections: This article previously used an insensitive and outdated term for residential hotel. In addition, the timeline incorrectly reported how long the Dillon’s store on Huntoon had been failing to turn a profit.